FSA seizes list of 38,000 share fraud targets

More than 38,000 people who could be targeted by fraudsters trying to sell worthless shares are being contacted by the City watchdog.

The Financial Services Authority (FSA) has recovered a masterlist used by criminals involved in boiler room scams.

The regulator said the list, which contains 38,242 names and addresses, was the biggest it had ever recovered, and it believes it is still being actively used by boiler rooms in the UK and abroad.

It said the majority of people on the list were based in London and the South East, but there were also significant numbers from Yorkshire and Lancashire.

'This is the biggest list we've ever recovered and by acting quickly
and contacting every single person on it we're hoping we can stop
people losing money' - Jonathan Phelan, head of unauthorised business department at FSA

It is in the process of writing to everyone whose name is on the
list, alerting them to the situation and giving them advice on how they
can avoid falling for the scam.

Boiler room scams involve fraudsters using high-pressure sales
tactics to con investors into buying non-tradable, overpriced or even
non-existent shares. They are thought to cost the UK around £200
million a year.

The firms selling the shares are not regulated by the FSA, meaning
consumers do not have access to the Financial Ombudsman Service and
Financial Services Compensation Scheme if things go wrong.

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The FSA received calls from more than 3,100 people who had been
contacted by boiler rooms during 2009, 734 of whom had become victims,
losing an average of £24,000 each.

Jonathan Phelan, head of the unauthorised business department at the FSA, said:

'This is the biggest list we've ever recovered and by acting quickly
and contacting every single person on it we're hoping we can stop
people losing money.

'Boiler room fraudsters often sound professional so it's easy to be
drawn in by their overblown claims and give them money to invest. The
reality is, however, that the shares are worthless or don't exist and
the money is lost forever.

'Cold calling to sell shares is rarely allowed, so anybody who receives a call like this should be extremely sceptical.'

The FSA advises anyone who receives a telephone call about buying shares out of the blue to hang up.

People thinking of buying shares should also check that the company
they are dealing with is authorised by the FSA and they should call
them back using the contact details provided in the FSA register.

The watchdog said anyone who had been contacted by a suspicious firm
or who had any doubts about a company should report the incident as
soon as possible to the FSA on 0300 500 5000.

In February the FSA reported that it had seen a dramatic increase in
the number of fraudsters selling shares using the names, registration
numbers and addresses of authorised firms in an attempt to trick people
into thinking they were legitimate.